How Low Can the S&P 500 Go?

NEW YORK (TheStreet) -- For short-term traders, last week was rough. It was difficult to make money on either side, long or short. With such a volatile and choppy environment, set-ups are more likely to fail and trying to anticipate the next move is a guessing game.

This week could be no different or worse. We have geopolitical strife with Ukraine. We have the Federal Reserve's Federal Open Market Committee and the ongoing asset-purchase tapering, plus options expiration.

Although I do not believe we have seen the so called "top," and that the bull market has more room to run, I am seeing more to be concerned about in the short term.

First, for the first time in months, I am seeing better short set-ups than long ones. Second, we are not yet considered oversold based on a popular metric measuring stocks below their 20-day moving averages.

Third, the recent breakout in the S&P 500 during the first week of March that took prices over 1880 represented a new 20-day. This high was not confirmed with 20-day highs in stocks, which is considered to be a divergence.

Finally, during last week's drop there was a lot of technical damage done to many high-flying momentum stocks last that deserves our attention.

Not yet considered oversold

New SPX 20-day highs were never confirmed with new 20-day highs in stocks:

Levels to watch:

We are very close to hitting the 50-day moving average  (at 88.30) on the Nasdaq, as seen by the PowerShares QQQ Trust (QQQ), and I would be surprised if we didn't at least visit it. We are a bit further away on the S&P 500 and iShares Russell 2000 Index (IWM), but they are looking more and more likely to be paying a visit in the near term. Read the notes on all three charts.

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